SEC accuses ex-Old Town mill owner of fraud
Lynn Tilton, the self-proclaimed billionaire and former owner of the Old Town Fuel & Fiber mill, is being accused of fraud by the U.S. Securities and Exchange Commission.
Bloomberg News reported that the SEC said on Monday that Tilton and her investment firm Patriarch Partners misled investors “about the value of risky pools of corporate loans,” leading her firm to collect $200 million in fees that it wasn’t entitled to receive. The SEC’s case against Tilton is being tried as an administrative action and not a civil lawsuit.
Under Patriarch’s ownership, the Old Town pulp mill shut down in August of last year until it was purchased out of bankruptcy court in December by Expera Specialty Solutions, a Kaukauna, Wisc.-based papermaker that reopened the mill in January.
SEC’s case surrounds three collateralized loan obligation funds set up by Patriarch that raised $2.5 billion from investors and was used to lend money to companies owned by the firm, including the Old Town mill. The SEC alleges that Patriarch misled investors by telling them that the value of the loan funds had not changed even when many of the companies had been failing to make partial or any payments on their loans.
Barbara Laidlaw, a spokeswoman for Patriarch, said in an emailed statement to the news outlet that, “We are disappointed that the SEC has chosen to bring an enforcement action that is ill-founded and at odds with Patriarch’s investment strategy, which was consistently disclosed since the inception of the funds.” She added: “We look forward to the opportunity to vigorously defend ourselves against the SEC’s allegations.”
Source: Bloomberg News
Correction: A previous version of this story incorrectly stated Lynn Tilton's first name.
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